Topics covered:

Insuring agreements

Exclusions

Conditions

Definitions

 Insuring Agreements

1.Employee Theft — Per Loss Coverage

We will pay for loss of or damage to "money", "securities", and "other property" resulting directly from "theft" committed by an "employee", whether identified or not, acting alone or in collusion with other persons.

2.Employee Theft — Per Employee Coverage

We will pay for loss of or damage to "money", "securities", and "other property" resulting directly from "theft" committed by each "employee", whether identified or not, acting alone or in collusion with other persons.

 Analysis

This is the first insuring agreement on CR 00 24 and CR 00 25. It is similar to the one found on CR 00 20, in that it applies to employee theft. However, the government crime coverage forms break the employee theft insuring agreement into two sections, one on a per loss basis and one on a per employee basis. The per loss coverage, like the coverage on CR 00 20, applies to theft of money, securities, and other property by an employee; the per employee coverage applies to loss of or damage to money, securities, and other property resulting from theft committed by each employee.

What the insurer is offering here is a varied approach to fit the facts of a theft. As an example: the insured has per loss coverage limits of $100,000 and per employee coverage limits of $100,000. If two employees get together and steal $150,000, the per loss coverage would only provide the insured with $100,000; the insured would still be out $50,000. However, under the per employee coverage of $100,000 for each employee, the insured could collect the full $150,000 loss since he has $100,000 available to apply for each of the two employees involved in the theft. This gives the insured better protection for potential losses. Now, it is for the insured to decide adequate limits for the per loss and the per employee coverages, but it makes sense to have both limits at least equal to each other.

 Exclusions

1.This insurance does not apply to:

a.Acts Committed By You

Loss resulting from "theft" or any other dishonest act committed by you, whether acting alone or in collusion with other persons.

b.Acts of Officials, Employees, Or Representatives

Loss resulting from "theft" or any other dishonest act committed by any of your officials, "employees" or authorized representatives:

(1)Whether acting alone or in collusion with other persons; or

(2)While performing services for you or otherwise;

except when covered under Insuring Agreements A.1 or A.2.

 Analysis

The first exclusion is the same as the first exclusion on CR 00 20, except that "your partners" and "your members" are dropped from the exclusion on CR 00 24. After all, CR 00 24 is for governmental entities, and "partners" or "members" are commercial entity terms, pertaining to business relationships. The same can be said of exclusion 1.b. CR 00 20 mentions "managers, directors, and trustees", but the wording on CR 00 24 is more appropriate for a governmental insured.

Either way, the coverage agreements do not apply to thefts or other dishonest acts committed by the named insured or its officials, employees, or representatives. No insurance policy is meant to apply to crimes committed by the insured against itself. Note the exception under exclusion 1.b. for insuring agreements A.1 and A.2. If the insured has purchased coverage for employee theft, it is obvious that that very coverage can not then be excluded.

2.Insuring Agreements A.1. and A.2. do not apply to:

a.Bonded Employees

Loss caused by any "employee" required by law to be individually bonded.

e.Treasurers Or Tax Collectors

Loss caused by any treasurer or tax collectors by whatever name known.

 Analysis

These two exclusions apply to the employee theft coverages. If an employee is bonded, that is meant to apply to any theft or dishonest acts on his part; coverage under CR 00 24 would be superfluous. As for treasurers and tax collectors, they represent a tremendous loss exposure because they handle huge sums of money on a daily basis. Such an exposure is better handled through the use of bonds, such as public officials bonds; for information on these bonds, see Public Officials Bonds. The exclusion for treasures or tax collectors replaces the exclusion for warehouse receipts that appears in the CR 00 20 and CR 00 21.

 Conditions

Neither CR 00 24 nor CR 00 25 have a consolidation-merger condition as do CR 00 20 and CR 00 21. This, of course, reflects on the governmental character of CR 00 24 and CR 00 25. CR 00 24 is the discovery version of the government crime coverage form, so it has the discovery condition while CR 00 25 does not have it. On the other hand, CR 00 25 has the following conditions that do not appear on CR 00 24 (but are on CR 00 21): loss covered under the current insurance and prior insurance issued by the insurer; loss sustained; and loss sustained during prior insurance.

The territory provision of the CR 00 24 and CR 00 25 removes Canada as a covered territory; as these are government policies, neighboring countries are not considered part of the coverage territory.

The valuation-settlement condition appears on CR 00 20, CR 00 21, CR 00 24, and CR 00 25. The difference is that the commercial crime coverage forms discuss the option of the insurer paying for loss of money or other property in other than US currency. The government crime coverage forms do not give the insurer such an option.

2.Conditions Applicable To Insuring Agreements A.1 and A.2.

a.Indemnification

We will indemnify any of your officials who are required by law to give bonds for the faithful performance of their duties against loss through "theft" committed by "employees" who serve under them, subject to the applicable limit of Insurance.

Analysis

This condition, appearing on CR 00 24 and CR 00 25, is applicable to the employee theft insuring agreements. It has already been noted that the government crime forms exclude coverage for loss caused by any employee required by law to be individually bonded. However, such employees can be supervisors or directors or department heads who have many other people working under their direction, and who therefore, have responsibility for many of the actions of the subordinates. In a nod to this legal responsibility, CR 00 24 and CR 00 25 offer to indemnify those officials who would be held responsible for the acts of theft on the part of the subordinates. In other words, if the supervisor of the municipal water works has an employee who steals $10,000, the supervisor may be held responsible due to his position; but, CR 00 24 will indemnify that supervisor, that is, compensate him for the amount he may have to pay.

4.Conditions Applicable To Insuring Agreements A.5 and A.6.

b.Special Limit Of Insurance For Specified Property

We will only pay up to $5,000 for any one "occurrence" of loss of or damage to manuscripts, drawings, or records of any kind or the cost of reconstructing them or reproducing any information contained in them.

 Analysis

This condition is applicable to the insuring agreements A.5 and A.6 which pertain to inside the premises robbery and safe burglary and to outside the premises loss respectively. This condition differs from the one on CR 00 20 in that it does not offer any payment for loss to precious metals, pearls, precious stones, or furs. Presumably, a governmental entity will not have such an exposure, or will have such quantities that a $5,000 limit would be useless.

 Definitions

CR 00 24 and CR 00 25 have sixteen definitions while CR 00 20 and CR 00 21 have twenty definitions. The terms missing on the government crime coverage forms are: client, employee benefit plan(s), manager, and member. This simply reflects the governmental nature of CR 00 24 and CR 00 25; such terms are not necessary for coverage purposes for a government entity. There are also some definitions that are revised because CR 00 24 and CR 00 25 offer coverage for a government entity as opposed to a private, commercial concern.

As an example of these revisions, the definition of "custodian" drops the words "partners" and "members" on CR 00 24 and CR 00 25; both of those words connote a business relationship and have no significance for a government entity. Another example is in the definition of "employee". CR 00 20 defines "employee" as including a director or trustee while that person is handling funds of an employee benefit plan; CR 00 24 revises that to an "official" handling the funds. Also in the definition of "employee", CR 00 20 uses words like broker, commission merchant, consignee, manager, director, and trustee; CR 00 24 does not use these words. A further example is the definition of "messenger": CR 00 20 declares that a messenger includes a relative of the named insured or a partner or member; CR 00 24, as a government crime coverage form, obviously has no use for such words.

There is one more revision in the definitions to be noted here. "Occurrence" is revised to include mention of insuring agreement A.2. on CR 00 24 pertaining to employee theft—per employee coverage. Whereas under insuring agreement A.1., "occurrence" means all loss caused by or involving one or more employees, under insuring agreement A.2., "occurrence" means all loss caused by each employee. In other words, "occurrence" under A.1. focuses on the total loss caused by employees, while "occurrence" under A.2. focuses on the amount of loss caused by each employee.